00:00:11:20 - 00:00:15:15
AT&T is a telecommunications company in the United States.
00:00:15:15 - 00:00:21:01
It's part of a three player market
at this point in time, with Verizon and T-Mobile.
00:00:21:01 - 00:00:25:15
They're the third largest in terms of the number of subscribers
that they have on their network.
00:00:25:15 - 00:00:28:06
They provide wireless and broadband services.
00:00:28:06 - 00:00:31:05
What's interesting about this is it’s a utility-like asset.
00:00:31:05 - 00:00:35:21
So you go and you pay your telephone bill
and you’re subscribed to your broadband access
00:00:35:21 - 00:00:38:16
and it becomes a very sticky product over the course of time.
00:00:38:16 - 00:00:41:02
It's very cash generative of over the course of time as well.
00:00:41:02 - 00:00:46:01
Telecommunications services are a very basic need
and utility and in the modern world.
00:00:46:01 - 00:00:48:24
This facilitates what we do on a day to day basis
00:00:48:24 - 00:00:51:17
communicating, for work, for personal use.
00:00:51:17 - 00:00:55:07
It gives us valuable data on the go
when we're trying to research
00:00:55:07 - 00:00:57:24
where we're going out to eat or how we get somewhere,
00:00:57:24 - 00:01:00:24
how we need to pull maps up on our cell phones
and things like that.
00:01:00:24 - 00:01:06:08
So it's a viable underpinning of today's modern infrastructure and the modern world.
00:01:06:08 - 00:01:10:20
For AT&T the addressable market is kind of
split into two categories.
00:01:10:20 - 00:01:16:07
Number one is the wireless side of the business,
where there's about 600 million wireless subscribers in the US.
00:01:16:07 - 00:01:22:07
That's split between three providers T-Mobile and Verizon
are the other two.
00:01:22:07 - 00:01:25:21
AT&T and these other two are trying to vie for share and
00:01:25:21 - 00:01:28:06
jockeying for that share and
that share shift over the course of time.
00:01:28:06 - 00:01:32:12
But largely it's a slow, steady, growing market overall.
00:01:32:12 - 00:01:36:10
The more interesting aspect is on the broadband
side of the business
00:01:36:10 - 00:01:40:01
where AT&T is trying to address close to 90 million subscribers
00:01:40:01 - 00:01:41:06
on that side of the business
00:01:41:06 - 00:01:46:17
and they're taking share away from
the classic wireline duopolies
00:01:46:17 - 00:01:50:13
that are in place right now with their fibre
that they've been laying out over the past several years.
00:01:50:13 - 00:01:52:21
AT&T is an interesting investment here
00:01:52:21 - 00:01:56:05
because it's been relatively unloved over the past several years.
00:01:56:05 - 00:02:02:10
All of the telcos within the US and globally have gone through this massive 5G capex ramping cycle.
00:02:02:10 - 00:02:06:08
Over the course of time, they spent a lot of money to hang up new radios, new equipment
00:02:06:08 - 00:02:11:10
to spend on spectrum and things like that to really get themselves up to speed for 5G.
00:02:11:10 - 00:02:13:23
Unfortunately, the market has not necessarily paid
00:02:13:23 - 00:02:17:20
for the 5G upgrades and investments
that they've done over the course of time
00:02:17:20 - 00:02:21:07
and in fact the telcos have really competed
with each other on price
00:02:21:07 - 00:02:24:19
and really hurt each other in terms of that pricing dynamic.
00:02:24:19 - 00:02:27:11
So what's interesting now is though that spending is largely
00:02:27:11 - 00:02:30:15
over for the capex cycle for 5G.
00:02:30:15 - 00:02:33:20
So the cash flows will naturally improve
because you don't have that spending.
00:02:33:20 - 00:02:35:13
It's all done and behind you
00:02:35:13 - 00:02:40:22
and the other interesting aspect of what we're seeing right now is all three telcos in the US are actually raising prices.
00:02:40:22 - 00:02:44:21
A lot of that cash drops down to the bottom line,
because it's a fixed asset
00:02:44:21 - 00:02:48:08
that you're raising that cash against on the other side.
00:02:48:08 - 00:02:51:21
The other incremental opportunity
that's very interesting for AT&T
00:02:51:21 - 00:02:55:05
is that they're aggressively going into the broadband side of the business as well
00:02:55:05 - 00:03:00:03
where there's been a lazy duopoly on the wireline side of the business for a very long time
00:03:00:03 - 00:03:04:09
and AT&T has been aggressively laying down fibre optic cable
which is an equivalent,
00:03:04:09 - 00:03:08:16
if not better solution than what's out there and aggressively taking share from these two other carriers.
